question: i don't own a home or any of the other great things that would allow me to itemize my deductions. with the allowable deductions that go with a standard deduction(student loan interest, IRA contributions) i still owe $700 in taxes this year.

my wife and i transferred over her 403b this past year to an IRA (no income taxes were taken out).

i learned that this transfer, since no taxes were taken out, does not count as a contribution.

i don't have $700 laying around and would need to set up a payment plan, otherwise i would contribute another $700 to the IRA and deduct the rest of my tazes owed.

so, here's my plan: withdraw cash from the IRA and pay the penalities, then turn right around and contribute $700 that is deductible. i'd only take out about $400 and pay the rest from what i have saved up.

so my question after all that is:is this the sensible thing to do? even though i am paying penalities, isn't a penalty on $400 better than paying all $700 to the government with interest on top of it?

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